- Deepak Dhanotiya
Wait... We are building a company!
How above poster helped us to decode next big opportunity in India retail?
From the picture below I need not to explain why India retail is one of the hottest space and biggest opportunity for Entrepreneurs to decode!!
India retail is in trending in investment and entrepreneurship discussions due to shifting behavioral patterns, rising middle class, followed by penetration of technology , improving logistics infra and government reforms (Demonetization, GST, FDI) . With scale like $1Tn, India retail have potential to create more billionaire (Can be a Baba also).
At ShopKirana we are experimenting day and night for last 18 months, to decode next big opportunity in India retail. Great efforts have been put in every minute detail to ensure we create significant value and contribute into the growth of India retail. Being dependent of 9Mn small retailers, we started with base belief that "B2B is the biggest opportunity, if we cater it well"
I have created brief of some of the developments and innovations we have done before we started any thoughts on expansion.
- Right service promise: 4hrs to 48 hrs, value for money
o We tried from instant delivery to 48 hrs delivery
o We balanced between speed, accuracy and cost.
o We have delivered 70,000 orders and 350,000+ line items to understand what is right value? Not only for customers but for the company too.
- Custom built ERP and CRM :
o Our ERP today can handle India scale with great innovations and easy to use UI. Every ERP assume users are pilots , we created with the thought that “No they are taxi drivers”
o We are India’s first 100% pull based B2B business with zero inventory, so ready-made solutions didn’t work I have personally worked on 3-4 ERP in my previous organisations like Cummins, Avtec and P&G . Also met several leading solution provider ,nothing was suitable and ready
o We decided we have to build something specific to India needs.We can seamlessly map demand and resource requirement with our ERP now.
Some beautiful illustrations below which makes our business smooth and life easy are :
o Auto order assembly: Automated the order fulfillment using 100% technology enabled decisions ,with right priority matrix. System automatically fulfill orders considering ToT improvement with every order.
Have to go through big order or big customer or long order or profitable order or FIFO and many more fighting discussionsIts about how fast you can assemble a car. Our theory of zero inventory worked well, we knew that “what a city wants to eat tomorrow is already there in the city, we just need to learn how to integrate the demand and supplies well"
o CRM is about two sided relationship :One side love is best demonstrated by below image .
It applies to customers too!! Relation is most important word in CRM. We understood the fact that relation is not possible without both partners interested to take it to next the level. Hence we educated the customer on CRM and automated the relation building based on analytics and patterns.
Customer is king but in today’s e-com clutter, king’s are losing identity. Here CRM helped us; we identified customer's parameters and behavior patterns and classified them. We reacted based on relation styles and usage patterns and automated the actions to take act on every relation.
- Unit economics: Big elephant
o Divide and rule: We divided the big elephant into pieces and then cooked it on different ovens.
- Identified three key drivers of unit cost , three founders three problems!! : (Although most of it is taken care by our agents (described later) but their profitability was our priority)Order receiving cost (usually people nullify it with customer acquisition or marketing cost but we tried to monitor and control ).Order processing costOrder delivery costKey was denominator in all formula that is "Avg Order size". Below picture reflect the progress . For other grocery players this may be satisfactory. But we are planning to touch avg order size to INR10,000 soon.
- Right retailer’s (Store’s) app: Don't find customer for your product , create product for your customer!!
o Stores are more of an individual’s with a predefined behavior patterns.
o We understood the psychology of how store owners thinks and draw patterns and then replicate on app UI.
Now we have UI designed based on psychology and mental flow of our customers We improved order placement time for avg order from 350 sec to 130 sec by creating right flow.Multilingual app also helped us to connect in local language
o Most interesting insight is: “A grocery store in India don’t know that ,it’s called a grocery store”
o While most of the app have categories like fabric care, most of store owner don’t understand what fabric care means. For him its detergent/washing powder or a Sabun!!
- Delivery technology and routing :
o Our delivery efficiency per vehicle has gone up 8 times in last 6 Months. “Unbelievable!! Yes that’s how our investor’s also reacted!!
o Forecast, Routing and vehicle load optimisation are key parameters
o Tech enabled delivery with ease of material and money handling
In COD, cash handling affects delivery efficiency more than product handling. Our integrated currency inventory management module helped us there
- Cracking the sales code:
o You optimize the operations ,if there is sale. Without sales all optimization look like laboratory experiments, sometime of no use.Our sales cohorts are fabulous and are most promising in the country
9+ orders per month/customer, its highest in the country on any platform
Our customer reliance pilots had been phenomenal. With 300% increment in monthly volume per customer and sale per customer touching consistent INR 50K /Month. One of the highest.
- Right pricing : Segmenting the
customers vs discounting all.
o India is a complex country, one pricing can’t fit all. But we did not want to create a negotiating or discounting platform too
o So we have come up with three tier pricing strategy based on market research and feedback, while keeping transparent pricing for all.
- Loyalty program:We call it dream program !
We knew from day one that we are in B2B hence repeat customers and loyalty is most important for usWe had to invent and reinvent loyalty program several times, till we come up with something never tested, we called it dream program.With a belief that dreams are important in everyone life and we can help small retailers by fulfilling their dreams.I personally went to deliver a chair to a retailer, he got through dream program he ordered it because his daughter wanted to study on a chair.Another person ordered set of coffee mug and one customer want to travel in flight once in his life so earning dream points !! Small items for us but this are people's dreams and they each dream matter to us.
Lifelong engagement :Our loyalty program is lifelong engagement programSimple: We introduced a virtual currency and made it comparable to INR , made it easy to understand
o Below are screen shots of some of the dreams a store owner can fulfill by being on our platform. There are 100's of such dreams a retailer can fulfill now.
- Market share is the key:
o We followed strategy of achieving market share category by category vs launching everything on platform and creating chaos and insignificance for every stakeholder
o With small scale today we have ~1% market share in all categories we play in Indore market
o Graph depicts how focused efforts on gaining market share can lead to substantial results.
o If we replicate the same 2% market share approach in India we will be $4Bn sale (Out of $200 Bn urban food and CPG retail) and with 5% it will be more than $10bn sales.
- Scale? : To be honest we need to answer on ground :)
o Without Scale, any model or idea with whatever unit economics or cohorts doesn’t make sense for entrepreneurship . Our biggest challenge in the journey was to come up with something which is “Easy to scale” .
We talked about LIC, Ola, Patanjali, HUL, Indian railway, Reliance Jio, Postal system, Public distribution, Future retail, Sahara India, Uber, Amway and many moreWe developed tech enabled agent's who are profitable. Today our agent’s economics are at par or better and more sustainable than Uber or LIC agent!!
During all this our team showed great patience and above poster was everyday guide to all of us!!
- Now our team had put a new poster next to the earlier one .